DOCTORAL THESIS INTERNATIONALISATION AND INTERNATIONAL MARKETING:

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1 DOCTORAL THESIS INTERNATIONALISATION AND INTERNATIONAL MARKETING: EXPORT BEHAVIOUR, INTERNATIONAL MARKETING STRATEGY AND EXPORT PERFORMANCE IN SPANISH SMALL AND MEDIUM- SIZED ENTERPRISES MARIA-CRISTINA STOIAN SUPERVISOR: Dr. ALEX RIALP-CRIADO Department of Business Economics Faculty of Economic and Business Studies Autonomous University of Barcelona 2010

2 Acknowledgements Three years working on this dissertation has been an insightful process as well as a rewarding experience. During these years, I have collaborated with a few people who have all played important roles in the completion of my dissertation. It is a pleasure for me to convey my gratitude to all of them. First of all, I would like to heartily thank Professor Alex Rialp, the supervisor of my dissertation, for providing me with the opportunity to explore the world of academic research and guiding my steps along this journey. His wisdom, patience, kindness and invaluable advice are always unforgettable. I am also especially grateful to Professor Josep Rialp for supporting me throughout the dissertation process. He provided me with moral support, guidance, insightful comments and suggestions for improvement which helped me arrange the technical and methodological details of my work. Next, I would like to express my deep appreciation to Professor Joaquim Verges and Professor Emili Grifell for their confidence in my work and the opportunities they provided me with throughout the journey. Professor Bengt Johannisson and Professor Călin Gurău, my advisors for my two research stays, deserve special thanks for warmly welcoming me and making me feel at home during the time spent at Växjö University (Sweden, 2005) and GSCM-Montpellier Business School (France, 2009). I would like to thank the whole staff at the Department of Business Economics (Autonomous University of Barcelona) for their professional, yet friendly conduct which made the long working hours a very enjoyable experience. I gratefully acknowledge the anonymous reviewers which have carefully read the original dissertation manuscript or the individual articles that stem from the dissertation and which were sent to various international conferences and academic journals. Their feedback was most interesting and collectively helped to improve the doctoral thesis. My thanks go to the interviewees, for dedicating part of their time and patience to this research, and also for their offer and interest to participate in future investigations. They represented a cornerstone in the completion of this dissertation. The financial support from the Ministerio de Educación y Ciencia (Spanish Ministry of Education and Science) which offered me a doctoral grant that facilitated the finalisation of the dissertation is also acknowledged. Warm thanks to all my friends (too many to list here, but you know who you are!) who have inspired me and have been by my side during this process. Finally, my family, especially my parents, deserve my sincere gratitude for believing in me and offering me unconditional support and encouragement. To them I dedicate this thesis. ii

3 Abstract The present dissertation aims to contribute to the international business and marketing literature by shedding light on the export behaviour and performance of small and medium enterprises (SMEs), in the Spanish geographical context, which represents one of the European settings characterised by high SMEs density and workforce employed by these enterprises. Spain s economic growth is vastly dependent on the results of the export activity. In spite of their relevance, there is a scarcity of research in the SME export centred literature, within the Spanish context, thus it becomes apparent that more investigations should be carried out in this particular setting. In this sense, the present study identifies and proposes for further analysis the following topics of increased importance for SMEs export activity and performance: 1) The role played by managerial characteristics and perceptions in determining export involvement and expansion; 2) The influence the internal and external determinants have on objective export performance and satisfaction with export performance and the potential impact of certain dimensions of export performance on other export performance dimensions; 3) The influence the standardisation/adaptation of the overall international marketing strategy has on objective export performance and satisfaction with export performance, simultaneously investigating how this relationship is moderated by certain internal and external determinants. Theoretical support is provided by several approaches: the gradualist approach to the internationalisation phenomenon, the Resource Based View (RBV) applied in the international context, the network theory and the contingency approach to the international marketing strategy. Both qualitative (Chapter 1) and quantitative (Chapter 2 and 3) methodologies have been combined for the completion of this dissertation. By employing the qualitative methodology based on in-depth case studies profound understanding of the internationalisation process in Spanish SMEs was gained. Consequently, a structured questionnaire was developed for further carrying out the quantitative study. Data was collected through an online survey addressed to the decision maker in charge of the export activity in Spanish SMEs. For empirically treating the quantitative data univariate and multivariate analysis with the Statistical Package for the Social Sciences (SPSS) and Structural Equation Modelling (SEM) - Analysis of Moment Structures (AMOS) were performed. The results show that, concurring with the RBV, decision maker s role, particularly his/her international outlook appears to be crucial for SME s export activity. Nevertheless, the influence of certain managerial characteristics and perceptions seems to be more prominent according to the internationalisation stage or to have a stronger impact on some export performance indicators. The findings also reveal the existence of a positive relationship between the objective export performance (export intensity and the number of export markets and zones) and the subjective export performance (managerial satisfaction with export position, export profitability and new market entry), relationship that to the best of our knowledge has not been explored before. Moreover, the empirical results display that successful export performance could be achieved by employing either a more standardised or a more adapted overall level of the international marketing strategy. Standardisation and adaptation should not be considered, in isolation, as pure strategies, but rather should be understood from a contingency perspective which suggests a balance between the iii

4 standardisation and the adaptation of international marketing strategy would lead to increased export performance. This study identified three internal and external contingent variables, namely the size of the firm, the technological intensity of the industry and the environmental factors, that moderate the relation established between the overall international marketing strategy and export performance, measured both in an objective and a subjective manner. Regarding the implications for practitioners, decision makers should be aware that, presently, due to rapid technological development along with the removal of various trade barriers, entering overseas markets is not bearing as much risk as it used to in the past, while representing a viable alternative for firm s growth and pursuit of higher profits. The fundamental role in improving objective export performance is played by their own foreign language skills, international business knowledge and firm s commitment to exporting, hence efforts should be directed towards acquiring these abilities as well as devoting resources to the export operations, in a systematic and organised manner. Therefore, policy initiatives should also aim at enhancing the development of decision maker s international outlook with a view to successfully formulating and putting into practice internationalisation strategies. As future research directions it would be interesting to replicate similar studies in distinct geographical contexts, so the results could be generalised to larger populations. Longitudinal analysis should also be conducted, thus complex constructs such as the degree of international orientation of the decision maker, the standardisation/adaptation of the international marketing strategy or the export performance could be analysed from a time-based perspective, allowing for the investigation of composite cause-effect relationships. iv

5 TABLE OF CONTENTS 1. INTRODUCTION OF THE DISSERTATION BACKGROUND OF THE DISSERTATION DISSERTATION PURPOSE RESEARCH QUESTIONS THEORETICAL UNDERPINNING RESEARCH METHODOLOGY ORGANISATION OF THE DISSERTATION REFERENCES APPENDIX ANALYSING EXPORT BEHAVIOUR THROUGH MANAGERIAL CHARACTERISTICS AND PERCEPTIONS: A MULTIPLE CASE-BASED RESEARCH INTRODUCTION THEORETICAL BACKGROUND LITERATURE REVIEW MANAGERIAL CHARACTERISTICS DEMOGRAPHIC CHARACTERISTICS INDUSTRY AND MANAGEMENT KNOW-HOW INTERNATIONAL OUTLOOK RISK TOLERANCE AND INNOVATIVENESS MANAGERIAL PERCEPTIONS REGARDING EXPORT STIMULI AND BARRIERS RESEARCH FRAMEWORK AND RESEARCH QUESTIONS EMPIRICAL METHODOLOGY RESULTS AND DISCUSSION WITHIN CASE ANALYSIS CASE A CASE B CASE C CASE D CROSS CASE ANALYSIS CONCLUSIONS, IMPLICATIONS, LIMITATIONS AND FUTURE RESEARCH DIRECTIONS REFERENCES APPENDIX EXPORT PERFORMANCE UNDER THE MICROSCOPE: A GLANCE THROUGH SPANISH LENSES INTRODUCTION THEORETICAL BACKGROUND LITERATURE REVIEW AND HYPOTHESES MANAGERIAL DETERMINANTS MANAGERIAL INTERNATIONAL OUTLOOK MANAGERIAL PERCEPTIONS REGARDING EXPORT STIMULI AND BARRIERS ORGANISATIONAL DETERMINANTS ENVIRONMENTAL DETERMINANTS ON THE RELATIONSHIP BETWEEN OBJECTIVE AND SUBJECTIVE EXPORT PERFORMANCE MEASURES 88 v

6 3.4 EMPIRICAL METHODOLOGY DATA COLLECTION MEASUREMENT OF VARIABLES INDEPENDENT VARIABLES EXPORT PERFORMANCE MEASUREMENT RESULTS PROFILE OF EXPORTING FIRMS FACTOR ANALYSIS RESULTS REGRESSION ANALYSIS RESULTS STRUCTURAL EQUATION MODELLING RESULTS RELIABILITY AND VALIDITY ANALYSIS HYPOTHESIS TESTING DISCUSSION EXPORT PERFORMANCE DETERMINANTS ON THE RELATIONSHIP BETWEEN OBJECTIVE AND SUBJECTIVE EXPORT PERFORMANCE MEASURES CONCLUSIONS, IMPLICATIONS, LIMITATIONS AND FUTURE RESEARCH DIRECTIONS REFERENCES APPENDIX INTERNATIONAL MARKETING STRATEGY AND EXPORT PERFORMANCE: A CONTINGENCY APPROACH INTRODUCTION THEORETICAL BACKGROUND LITERATURE REVIEW AND RESEARCH HYPOTHESES INTERNATIONAL MARKETING STRATEGY STANDARDISATION/ADAPTATION AND EXPORT PERFORMANCE PRODUCT STRATEGY STANDARDISATION/ADAPTATION PRICE STRATEGY STANDARDISATION/ADAPTATION PROMOTION STRATEGY STANDARDISATION/ADAPTATION DISTRIBUTION STRATEGY STANDARDISATION/ADAPTATION INTERNAL AND EXTERNAL MODERATING VARIABLES FIRM SIZE TECHNOLOGICAL INTENSITY OF THE INDUSTRY ENVIRONMENTAL DETERMINANTS RESEARCH HYPOTHESES GENERAL HYPOTHESES SECONDARY HYPOTHESES METHODOLOGY DATA COLLECTION MEASUREMENT PRODUCT/PRICE/PROMOTION/DISTRIBUTION STRATEGY: STANDARDISATION-ADAPTATION OBJECTIVE EXPORT PERFORMANCE SATISFACTION WITH EXPORT PERFORMANCE FIRM SIZE TECHNOLOGICAL INTENSITY OF THE INDUSTRY ENVIRONMENTAL DETERMINANTS RESULTS DESCRIPTIVE RESULTS RELIABILITY AND VALIDITY ANALYSIS HYPOTHESES TESTING DISCUSSION CONCLUSIONS, IMPLICATIONS, LIMITATIONS AND FUTURE RESEARCH DIRECTIONS 155 vi

7 4.8 REFERENCES APPENDIX CONCLUSIONS OF THE DISSERTATION SUMMARY OF MAIN RESULTS AND DISCUSSION IMPLICATIONS FOR PRACTITIONERS IMPLICATIONS FOR POLICY MAKERS LIMITATIONS OF THE DISSERTATION FUTURE RESEARCH DIRECTIONS REFERENCES 187 LIST OF TABLES Table 1.1 Key indicators of SMEs in the non-financial business economy, Table 2.1 Contemporary research on managerial determinants of export behaviour Table 2.2 General information about the companies 67 Table 2.3 Managerial characteristics and perceptions 68 Table 3.1 Variable measurement 117 Table 3.2 Sample profile 118 Table 3.3 Factor analysis results 119 Table 3.4 Descriptive statistics and correlations 120 Table 3.5 Results for OLS stepwise regression analyses 121 Table 3.6 Correlations for the convergent validity for objective export performance 122 Table 3.7 Results for structural equation modelling 122 Table 4.1 Sample profile 165 Table 4.2 Descriptive statistics for the international marketing mix and export performance variables 166 Table 4.3 Explanatory factor analysis 167 Table 4.4 Correlations for convergent validity for objective export performance 168 Table 4.5 Correlations for convergent validity for satisfaction with export performance 168 Table 4.6 Correlations for convergent validity between the overall standardisation/adaptation components 168 Table 4.7 Correlations for discriminant validity for the overall standardisation/adaptation construct 169 Table 4.8 Results for the general structural equation modelling 170 Table 4.9 Summarised information regarding the structural equation models 171 LIST OF FIGURES Figure 1.1 Density of SMEs Number of SMEs per 1000 inhabitants, Figure 2.1 Research framework: Managerial determinants of SMEs export behaviour 70 Figure 2.2 Prevalent export determinants according to stage (export involvement and expansion) 71 Figure 3.1 Conceptual model of export performance 123 Figure 3.2 Structural equation model 124 Figure 4.1 Conceptual model 172 Figure 4.2 Convergent/discriminant validity of overall standardisation/adaptation construct 173 Figure 4.3 Structural equation model 174 vii

8 1. Introduction of the Dissertation 1.1 Background of the Dissertation Small and medium enterprises (SMEs) play an pivotal role in generating economic well-being for most countries (Acs, Morck, Shaver, & Yeung, 1997; Brouthers & Nakos, 2005; Karandeniz & Göçer, 2007; Katsikeas, Bell, & Morgan, 1998; Nieto & Fernández, 2006) especially as they represent the main part of the industrial base (Sousa, 2004). At the European Union (EU) level there are approximately 23 million SMEs which generate around 100 million workplaces and represent more than 99 per cent of the total population of EU enterprises. Therefore, they are crucial for the well functioning of the European economy (Puente, 2009). Within the EU-27 there was an average of 39.9 SMEs within the nonfinancial business economy 1 per 1000 inhabitants in The highest densities of SMEs were recorded in the Czech Republic (86.0), Portugal (80.5), followed by three Mediterranean countries: Greece, Italy and Spain (Figure 1.1) (EUROSTAT, 2008). ( Insert Figure 1.1 about here ) Regarding the overall importance of SME business organisations for the national economies in Europe there are seven countries where the SME sector is employing more than three quarters of the workforce and which are clearly above the European average (67%): Cyprus (84%), Portugal and Greece (82%), Italy (81%) as well as Spain (79%), Estonia (78%) and Latvia (76%) (UEAPME, 2009). 1 Non-financial business economy: NACE sections C to I and K. 1

9 Spain represents one of the European countries with high SMEs density as well as workforce employed by these enterprises. More precisely, at the Spanish level there are around thousand SMEs (1-249 employees) which correspond to more than 99.9 percent of the total number of enterprises. They account for 68.5 percent of the Growth Domestic Product (GDP) and 79 percent of total employment (EUROSTAT, 2008) (Table 1.1). ( Insert Table 1.1 about here ) Numerous studies draw attention upon the direct link between internationalisation and increased SMEs performance. Pro-active internationalisation reinforces growth, enhances competitiveness as well as supports the long term sustainability of companies (European Commission, 2009). Globalisation has brought a shift to the economic environment of the European SME. The progressively disappearing barriers and borders, the vastly improved logistics and communications systems available to all companies together with the information technology revolution are exposing all companies both to new markets and to international competition. As a result, SMEs that do not consider internationalisation are unknowingly self imposing a severe restriction on their potential for long term survival (European Commission, 2007). Improving the international contributions of the small business sector is widely considered as an increasingly important policy priority in countries across the world. More specifically, according to the European Commission (2008) it is fundamental for Europe to increase the capacity and effective internationalisation of SMEs, which is well below its full potential. In order to enhance the international involvement of European SMEs, the European Commission launched a project for Supporting the internationalisation of SMEs to understand the barriers that hinder greater SME involvement on international operations and the drivers that foster the process (European Commission, 2

10 2009). Besides, all Member States possess a range of support measures to help smaller companies expand their international operations (European Commission, 2009). In this sense, The Spanish Institute for Foreign Trade ( Instituto Español de Comercio Exterior ICEX ) provides sustained export support programs for SMEs regarding the export activity. For instance, the Program of Initiation of Exterior Promotion ( Plan de Iniciación a la Promoción Exterior Programa PIPE ) which has as target Spanish SMEs interested in international involvement was enforced for helping firms to initiate or consolidate their internationalisation process aiming at reducing incoming costs and risks specific to this type of activities. Thus, Spanish SMEs could benefit from a free diagnostic regarding their competitive capacities, could be assisted by an expert advisor who offers guidance for the exporting process and could learn the steps and the typical procedures to follow in the internationalisation process, in this way decreasing both costs and risks associated with the international activity (ICEX, 2009a). The growing importance of SMEs in today s economies together with their increasing international involvement make it essential that we improve our knowledge of their internationalisation process (Fernández & Nieto, 2006). Although various internationalisation modes could be pursued, exporting represents a viable strategic option for firms to internationalise and has remained the most frequently used foreign market entry mode (Zhao & Zou, 2002) especially for many small and medium enterprises (SMEs) for which it is acknowledged to be the most popular, fastest, and easiest way of becoming international (Hultman, Robson, & Katsikeas, 2009; Leonidou, Katsikeas, Palihawadana, & Spyropoulou, 2007; Theodosiou & Katsikea, 2007). Undeniably, exporting activities gain particular importance for smaller firms survival, growth and long-term viability, since exporting represents a less resource-laden approach as compared with alternative foreign market entry 3

11 and expansion modes, such as joint ventures arrangements or manufacturing operations overseas (Morgan & Katsikeas, 1997). Similar to many other EU countries, Spain s economic growth is dependent on the results of the export activity. Merchandise and commercial service exports have gradually increased after Spain joined the EU, in 1986, and have also been stimulated by the European Monetary Union (EMU), To be more precise, while the total exporting value was of 105 thousand million euros in 1999 it steadily increased to 147 thousand million euros in 2004 and further to 188 thousand million euros in 2008 (ICEX, 2009b). Currently, the Spanish economy presents a degree of international openness of approximately 65% to the gross domestic product (GDP) (Lucio, Mínguez, Valero, & Mednik, 2008) and ranked seventh for merchandise exports and fifth for commercial services exports among the EU countries, in 2005 (WTO, 2006). All together, these characteristics demonstrate that Spanish firms are strongly motivated to pursue and improve their international activity, thus the topic related to export performance and its potential determinants becomes essentially relevant in this context. Moreover, there is a certain need for research to pay attention to European firms, as most studies on the export activity have focused either on companies based in the United States of America (USA) (Calantone, Kim, Schmidt, & Cavusgil, 2006) or on the Anglo-Saxon context in general, as recent reviews on export performance reveal (Sousa, 2004; Sousa, Martínez, & Coelho, 2008). In particular, Spain represents one of the European economic settings which has received limited research attention in the export centred literature (Suárez & Álamo, 2005). 4

12 1.2 Dissertation Purpose For over fifty decades academics and governmental institutions have paid increased attention to identifying the potential drivers of export behaviour and performance. This aims not only at advancing the international business literature but also at providing useful support to practitioners. Nevertheless, various topics within the international business literature although have been frequently investigated still remain conflictive issues. Particular to the case of SMEs is the fact that the reasons that move companies to internationalise are closely linked to the personal and professional experiences of the owner/manager and his/her views regarding the future of the firm, as commitment to exporting is likely to be determined by one individual or a small management team (Boter & Holmquist, 1996; Crick & Chaudhry, 1997; European Commission, 2007; Hutchinson, Quinn, & Alexander, 2006; Lautanen, 2000; Lloyd-Reason & Mughan, 2002; Welch & Luostarinen, 1988). As decision making in the SME is contingent upon managerial perceptions, it is doubtful that decisions for growth in foreign markets will be taken unless the management exhibits positive views regarding opportunities and potential barriers concerning international expansion (Vida, Reardon, & Fairhurst, 2000). Nevertheless, there is a lack of consensus among scholars as to what constitutes the managerial factor in determining exporting and what specific dimensions are influenced by management (Leonidou, Katsikeas, & Piercy, 1998). Once involved in exporting, firms survival and expansion and the consequent economic growth of numerous countries are strongly contingent upon a better comprehension of the determinants that influence their export performance (Sousa, Martínez, & Coelho, 2008). Numerous organisational and environmental factors may play a significant role in influencing 5

13 decision maker s perception regarding export behaviour. During the last four decades, many studies have related one or multiple of these determinants to export behaviour and performance, however most of them adopting either an internal perspective (managerial and/or organisational factors) or an external one (environmental factors), while only few have considered both groups simultaneously, thus no general agreement has been reached. In addition, scholars have argued that export performance is a complex phenomenon which should be assessed both from an objective and a subjective point of view and also that no attempt has been made to examine the relationship between objective and subjective export performance measures (Katsikeas, Leonidou, & Morgan, 2000). Recent studies highlighted that future research should consider the possibility that certain dimensions of export performance may act as determinants for some other export performance dimensions (Diamantopoulos & Kakkos, 2007; Sousa, Martínez, & Coelho, 2008). The decision concerned with the standardisation versus adaptation of the international marketing strategy, which ultimately may determine export performance, has been, is and will be a research area of increasing interest for both academics as well as practitioners (Rosenbloom, Larsen, & Mehta, 1997; Viswanathan & Dickson, 2007; Waheeduzzaman & Dube, 2004). The desirability and/or feasibility of standardising or adapting the international marketing strategy have been subject to numerous controversial debates, however without reaching a general agreement, for more than fifty decades. Despite its relevance, the potential relationship established between the standardisation/adaptation of the international marketing strategy and the subsequent export performance, is characterised by a relative paucity and remains unresolved; therefore, further research attention is needed (Katsikeas, Samiee, & Theodosiou, 2006; Lages, 2000; Shoham & Albaum, 1994; Theodosiou & Leonidou, 2003; Waheeduzzaman & Dube, 2004; Zou, Andrus, & Norvell, 1997). 6

14 In this sense, the present study identifies and proposes for further analysis the following topics of increased importance for export activity and performance: The role played by managerial characteristics and perceptions in influencing export involvement and expansion. The influence the internal and external determinants have on export performance measured both objective and subjectively, as managerial satisfaction with export performance. In addition, this dissertation investigates the potential impact of certain dimensions of export performance on other export performance dimensions, relations that have received very little attention to the present. The impact the standardisation/adaptation of the overall international marketing strategy has on objective export performance and satisfaction with export performance, simultaneously investigating how this relationship is moderated by certain internal and external factors. In light of the above mentioned, the general purpose of this dissertation focuses on investigating which are the relevant export determinants that may influence the export involvement, expansion and performance of Spanish exporting SMEs. The following research questions are addressed and are to be developed in three independent chapters. 7

15 1.3 Research Questions 1. Which are the relevant managerial characteristics and perceptions and how do they influence the export behaviour (involvement and expansion) of Spanish SMEs? 2. Which internal (managerial and organisational) and external (environmental) determinants influence objective export performance and satisfaction with export performance? And does the objective export performance mode of assessment have an impact on the subjective one? 3. Does the standardisation/adaptation of the overall international marketing strategy influence objective export performance and satisfaction with export performance? And is this relationship moderated by certain internal and external factors? 1.4 Theoretical Underpinning For seeking answers to the research questions mentioned above theoretical support was provided by several approaches. The gradualist approach to the internationalisation phenomenon, particularly appropriate for studying SMEs, conceptualises the internationalisation of the firm as a learning process based on the accumulation of experimental foreign market knowledge (Rialp & Rialp, 2001). Both the Uppsala internationalisation model (U-Model) (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977; 1990) and the Innovation-related models (I-Models) (i.e. Bilkey & Tesar, 1977; Cavusgil, 1980; Czinkota, 1982; Reid, 1981) posit that internationalisation is an incremental process based on various stages that determine changes in the behaviour and commitment of the managers which are ultimately reflected on the international orientation of the firm. For enhancing the understanding of the internationalisation process of smaller firms, the network theory has also been considered. The international activity appears to be largely driven by network relationships which generally stem in SMEs from manager s personal contacts in foreign markets (Andersen, 2006; Coviello, Ghauri, & Martin, 1998; McDougall, Shane, & 8

16 Oviatt, 1994). Moreover, managerial and organisational experience in international business could be enhanced by the international experience acquired by other companies with which a network contact is maintained (Pla & Suárez, 2001). Drawing upon the Resource Based View (RBV), firm resources are sources of competitive advantages. Thus, an important implication of the RBV is that a wide range of individual, social and organisational phenomena within the firms might be sources of sustained competitive advantage (Barney, 1991). Furthermore, the significance attained by the RBV in the 1980s has led academics to base their arguments on intangible resources, which may be understood to be those assets, know-how and/or skills which are difficult to formalise and be reproduced by competitors. Hence, these intangible resources become strategic assets, generating a competitive advantage for the firm, and finally generating benefits (Delgado, Ramírez, & Espitia, 2004). Further developments relate this theory to the international context, suggesting that those firms which present unique bundles and combinations of resources stocks may have a higher proclivity towards internationalisation (Bloodgood, Sapienza, & Almeida, 1996). Following the Resource Based View, SME s manager may represent one of the most valuable, unique, and hard to imitate resources and firm s activities and commitment to exporting are most likely determined by one individual or a small managerial team. For understanding how the international marketing strategy may influence export performance three broad approaches have been considered in the international business literature: total standardisation, total adaptation and a contingency perspective. However, the present state of art of the international marketing literature reveals that neither total standardisation, nor total adaptation necessarily lead to superior export performance, but the attainment of an optimal fit between the international marketing strategy and the particular context in which the strategy is implemented, characterised by specific internal organisational characteristics and environmental forces. This contingency approach looks for a balance between international marketing strategy standardisation and 9

17 adaptation. It posits that no strategy is strictly better than the other. Standardisation or adaptation is not a dichotomous decision, but rather a matter of degree as marketing strategies are contingent upon internal and external factors (Hultman, Robson, & Katsikeas, 2009; Jain, 1989; Lages & Montgomery, 2004; Quelch & Hoff, 1986; Vrontis, 2003). More precisely, a firm that adapts its practices appropriately to its own characteristics and to the environment in which it operates would outperform firms that are not concerned with achieving a coalignment between the international marketing strategy and the internal and external determinants, thus choosing an inappropriate degree of standardisation/adaptation (Dow, 2006). Therefore, this dissertation also relies on the contingent perspective which allows for various degrees of standardisation which are contingent on the internal organisational characteristics and the environmental forces (Zou, Andrus, & Norvell, 1997). 1.5 Research Methodology For the completion of this dissertation both qualitative (Chapter 1) and quantitative (Chapter 2 and Chapter 3) methodologies have been combined. For Chapter 1 which investigates initial export involvement and export expansion through managerial characteristics and perceptions a qualitative methodology was preferred following Yin (1989), leading to multiple case studies based mostly, but not only, upon in-depth, semistructured interviews. The approach selected for this chapter is consistent with a growing trend towards the case-study method as a particularly valuable research technique in empirical studies in the marketing/entrepreneurship/internationalisation fields of research (Carson & Coviello, 1996; Coviello & Munro, 1997; Julien, Joyal, Deshaies, & Ramangalahy, 1997). The methodological approach is also motivated by the fact that, according to several qualitative methodologists (Eisenhardt, 1989; Maxwell, 1996; 1998; Yin, 1989; 1998) and 10

18 also international business/marketing researchers (Chetty, 1996; Merrilees & Tiessen, 1999), this research method allows dynamic, long-term decision-making processes, such as exporting, to be much more deeply investigated in particular firm settings. The conceptual, non-statistical sample used in the present study was originally selected from a larger Spanish firm Data Base (SABI). The companies chosen for subsequent analysis are four highly specialised and innovative Spanish exporting SMEs (coded as A, B, C, and D to preserve confidentiality). The following basic selection criteria were employed for constructing the purposeful sample: be currently active exporters in multiple markets worldwide with export intensity equal or higher to 25% of their total sales, be established in Spain, employ from one to 249 staff, and belong to different manufacturing sectors as main business activity). As a requirement to achieve construct validity, a combined use of the following multiple information sources was employed in the data collection process in order to establish a chain of evidence that allowed for several perspectives on each case firm: in-depth, semi-structured interviews with entrepreneurs, founders and/or managers deeply involved in the export decision-making processes in their respective firms, together with company websites, internal documentation provided by the company, product and firm brochures, and other secondary data. During the recorded interviews held by the research team and the informant/s in each firm (lasting 90 to 120 minutes on average) in May-June 2006, detailed notes were also taken by a second interviewer who was not actively involved in the interview process. Then, full write-ups were constructed on each company in the form of a detailed case study, focusing on the specific characteristics of each case situation. In this case composition phase, the interviewed decision-makers were also given the opportunity to add their suggestions and comments on several drafts of the case studies with the view of obtaining construct validity. Also, reliability requirements were assured by the use of the same research protocol for each specific company and by the development of a complete database in the data collection phase. 11

19 By employing the qualitative methodology based on in-depth case studies it was possible to verify which of the export behaviour determinants highlighted by the international business literature are relevant at present for enhancing the export performance of SMEs in the Spanish context. Consequently, in accordance to the results provided by the four interviews carried out, a new structured questionnaire was developed in September-October 2007, for further carrying out a qualitative study. In this way its comprehensibility was assured verifying as well which of the export performance determinants and measures highlighted by the international business literature were relevant in the specific context of this research. It is equally important mentioning that the interviews with the practitioners revealed a reticence of the respondents when asked to provide financial information regarding export performance in their companies. Thus, based on the constructive feedback received from the export managers interviewed, it was decided that in order to avoid high item non-response rates, only the least problematic performance variables were to be assessed objectively, namely export intensity and export market geographical coverage while profitability, sales growth, market share and financial results related items were to be subjectively measured by the use of a satisfaction measurement scale. Data was collected through an online survey addressed to the decision maker in charge of the export activity in Spanish SMEs. For selecting the firms to which the questionnaire was aimed, the Kompass data-base was used. A central concern of this research was to assure that the questionnaire respondent was the decision maker in charge of export operations in the firm. In this sense, a personal address represented an indispensable requirement for participating in the survey. Thus, a sample of 423 decision makers in charge of exports in their respective companies (both manufacturing and service enterprises), presenting a personal address, was identified and selected to participate in the survey. The questionnaire was sent out in February 2008, and was followed by two other reminder e- mailings. The sample obtained was used for the elaboration of Chapter 2 and Chapter 3. After 12

20 eliminating those observations that did not provide complete answers for all the questions related to the study: 146 cases (exporting SMEs of at most 249 employees) were considered valid, representing an effective response rate of 34.5%, for the elaboration of Chapter 2 and 155 cases (exporting SMEs of at most 499 employees), representing an effective response rate of 36.6% were obtained for further use in Chapter 3. The difference in the number of observations used for the two chapters is given by the number of missing observations for each specific item to be utilised in the two chapters. Also, in the sample used for the elaboration of Chapter 2, the SMEs follow the definition put forward by the European Union, meaning enterprises having between employees while for Chapter 3, SMEs up till 499 employees were included in the valid sample, in order to successfully apply the methodology chosen for the empirical analysis in this chapter. The issue of the non-response bias was addressed by employing Armstrong and Overton s (1977) extrapolation procedure. More precisely, early respondents were compared to middle and late respondents using a series of t- tests. No significant differences were found between the three groups of respondents with respect to the size, age, export experience and industrial sector of the firms, indicating that non-response bias was not a problem. Moreover, very similar representativeness was observed, in terms of the previously mentioned characteristics, when comparing the 146 and 155 valid observation samples to the general population of Spanish exporting SMEs (ICEX, 2008). For empirically treating the data for Chapter 2 Descriptive Analyses, Factor Analysis, Ordinary Least Square (OLS) Regression Analysis and Structural Equation Modelling (SEM) were performed, while for Chapter 3 Descriptive Analyses, Factor Analyses and SEM were carried out. SEM is one of the most widely used techniques for analysing multivariate data in the social and behavioural sciences. It represents a powerful multivariate method allowing the 13

21 evaluation of a series of simultaneous hypotheses about the impact of latent and manifest variables on other variables, taking measurement errors into account (Lee, 2007). In this sense the relationship between the objective and subjective export performance modes of assessment as well as the association between the overall standardisation/adaptation degree of the international marketing mix and the export performance measured objectively and subjectively were tested using SEM methodology. For carrying out the empirical analysis for these two chapters Statistical Package for the Social Sciences (SPSS) and Analysis of Moment Structures (AMOS) Software were used. 1.6 Organisation of the Dissertation The remainder of the dissertation is organised in three individual chapters: Chapter 1 investigates export behaviour, namely involvement and expansion through managerial characteristics and perceptions using a case-study methodology; Chapter 2 researches the influence the internal and external export performance determinants have on the subsequent export performance and analyses the relation established between the export performance measured objectively and export performance measured subjectively employing a quantitative methodology; Chapter 3 analyses whether the standardisation/adaptation of the overall international marketing strategy influences objective export performance and satisfaction with export performance at the same time investigating how this relationship is moderated by certain internal and external factors utilising a quantitative methodology. 14

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